Alternative payment methods (APMs)
Non-card checkout options create varied authorisation, settlement and reconciliation flows across global markets. Alternative payment methods sit within one integration, with Cardflo standardising transaction data and routing each payment type to capable acquirer partners.
- Category
- Methods
- Capabilities
- 10
- Available on
- All plans
Alternative Payment Methods (APMs) encompass a wide array of payment types distinct from traditional card schemes. Understanding their operational mechanics is crucial for effective integration and management, particularly regarding how transactions are initiated and settled.
Cardflo provides the tooling to manage these diverse payment methods, offering insights into their specific authorisation models, fund flow types, and associated risk profiles, enabling merchants to configure and optimise their acceptance strategies.
Adding a new local method or wallet is a configuration change, not a rebuild, so you can launch in a new market without a fresh integration project. Settlement, reporting and reconciliation stay unified across every method.
Alternative payment methods (APMs) overview
APMs present distinct operational characteristics compared to traditional card payments, primarily in their authorisation mechanisms.
While cards typically involve a push authorisation request from the merchant to the issuer, many APMs, especially bank transfers and some wallets, operate on a pull or direct debit model, requiring different integration patterns and state management from the merchant system. This fundamental difference influences how transactions are processed and reconciled.
Fund flows vary significantly across APM categories. Some, like instant bank transfers, are push-based, with funds immediately debited from the customer's account.
Others, such as direct debits or certain BNPL schemes, involve pull mechanisms where funds are collected by the merchant or payment provider at a later stage, introducing varying settlement times and reconciliation complexities. Each fund flow type demands specific handling for reporting and financial operations.
Chargeback exposure and refund processes also differ considerably. Card schemes have well-defined chargeback rules, but APMs may offer different dispute resolution mechanisms or none at all, impacting a merchant's risk profile.
Refund processing likewise varies, from immediate reversals for some digital wallets to manual bank transfers or adjustments to a BNPL repayment schedule, requiring merchants to adapt their customer service and financial workflows.
How alternative payment methods (APMs) works
Select method categories
Merchants configure which APM categories they wish to accept within the Cardflo dashboard. This involves specifying preferences for wallets, BNPL providers, bank transfer types, and other methods. Each category has distinct configuration options, such as required customer data fields or specific authentication flows, which are set here to align with operational needs.
Configure authorisation flows
For each selected APM category, merchants define the preferred authorisation flow. This includes setting parameters for customer redirection, webhook notifications for push-based payments, or mandate setup for pull-based methods like direct debits. Cardflo orchestrates these flows, ensuring adherence to the specific requirements of each payment type and provider, managing the sequence of events from initiation to confirmation.
Define dispute and refund policies
Merchants establish their internal policies for managing disputes and refunds specific to each APM category. This involves setting thresholds for automatic refunds, specifying timelines for manual review, and outlining communication protocols for chargeback equivalents. Cardflo's tooling assists in tracking these processes, providing data on dispute rates and refund completion for different APM types.
Monitor performance and costs
Ongoing monitoring of APM performance and cost structures is conducted through Cardflo's reporting tools. Merchants analyse transaction success rates, average transaction values, and per-transaction costs for each category. This data informs strategic decisions regarding which APMs to prioritise or how to adjust pricing models to account for varying scheme fees and operational overheads.
Why alternative payment methods (APMs) matters
Control over fund flow and reconciliation
Different APMs present varied fund flow mechanisms, from instant push payments to delayed pull debits. Understanding these distinctions allows merchants to configure their financial reconciliation processes accurately, anticipating when funds will settle and aligning internal accounting with actual payment receipt. This precision helps prevent discrepancies and ensures accurate cash flow forecasting, which is critical for financial health and operational planning.
Mitigation of specific risk profiles
Each APM category carries a unique risk profile regarding chargebacks, fraud, and payment reversals. Instant bank transfers, for example, typically offer lower chargeback exposure than some digital wallets. By understanding the specific dispute mechanisms and liability shifts associated with each method, merchants can implement targeted risk management strategies, optimising their acceptance portfolio to minimise potential losses and improve overall payment security posture.
Alternative payment methods (APMs) use cases
Invoice based checkout
B2B merchants accepting invoice based APMs face delayed confirmation, asynchronous payment status updates and settlement that may arrive after goods are dispatched. Cardflo maps pending, paid, expired and refunded states through one gateway, while acquirer partners support reconciliation against order references and settlement reports.
Cash voucher acceptance
Merchants offering prepaid cash vouchers must keep orders pending while customers obtain a voucher and complete payment through an authorised outlet. Cardflo manages expiry notifications, asynchronous confirmations and fulfilment triggers through one API, helping operations teams distinguish abandoned orders from confirmed funds before releasing stock.
Buy now pay later
Retailers offering buy now pay later must coordinate lender approval, partial captures, cancellations and refunds across split fulfilment cycles. Cardflo standardises transaction states through its gateway and routes supported flows to acquirer partners, giving finance teams consistent reporting for merchant settlement, customer repayments and returned goods.
Global non-card digital marketplaces
Finance teams managing several APMs receive settlement files with different currencies, payout schedules, fee fields and transaction references. Cardflo consolidates gateway reporting and normalises payment, refund and reversal statuses, enabling merchants to match provider payouts to orders and investigate short settlements without maintaining separate reconciliation workflows.
Alternative payment methods (APMs) by the numbers
Average improvement in checkout completion rates when merchants introduce local payment methods in non-card-dominant markets, based on cross-border trade benchmarks.
A typical decrease in cart abandonment observed when a consumer's preferred local payment option is available at the point of sale.
The proportion of global e-commerce volume currently transacted via alternative payment methods, reflecting the declining dominance of traditional credit and debit cards.
Methodology: these figures are illustrative ranges drawn from published industry data and observed merchant cohorts, not guarantees. Actual results depend on your risk profile, card mix, geography and acquiring setup, and are confirmed only in your own pricing and approval terms.
Related terms
Talk to our team about a live rollout across our acquirer partners' rails.
What you get with Alternative payment methods (APMs)
- Wallets often use tokenised credentials or linked bank accounts for push authorisations, typically settling quickly.
- Buy-Now-Pay-Later (BNPL) schemes involve instalment plans, with initial authorisations and subsequent pull payments.
- Bank transfers are typically push payments, requiring customer initiation and confirmation at their banking portal.
- Account-to-account (A2A) payments facilitate direct bank transfers, bypassing card networks entirely, offering push-based settlement.
- Direct debits are pull payments, where the merchant, with customer consent, initiates fund collection from their bank account.
- Cash vouchers and prepaid methods are push-based, requiring upfront payment or loading before the transaction.
- Authorisation for wallets often relies on customer authentication within the wallet provider's interface.
- Chargeback exposure is generally lower for push-based APMs like instant bank transfers compared to card schemes.
- Refunds for BNPL services typically involve adjusting the customer's outstanding balance or a direct bank transfer.
- Recurring billing mechanisms for APMs vary, often leveraging tokenisation or direct debit mandates where applicable.
A short scoping call, then a written plan for your MIDs.
Questions about Alternative payment methods (APMs)
How do APM transaction fees compare to standard card interchange rates?
Pricing for alternative payment methods varies significantly by category and region. While cards involve interchange, scheme fees, and acquirer markups, APMs often use a flat fee or a percentage-based commission set by the provider.
In many cases, local bank-to-bank transfers are less expensive than international credit cards because they bypass the complex card network infrastructure.
However, premium methods like BNPL may carry higher merchant fees in exchange for higher conversion rates and the assumption of credit risk by the provider.
Are alternative payment methods subject to the same chargeback rules as cards?
No, APMs follow different dispute logic. Many bank-transfer-based systems are 'push' payments, meaning they are inherently more secure and often do not have a formal chargeback mechanism similar to the one defined by Visa or Mastercard.
While some digital wallets offer buyer protection, the merchant is generally better protected against friendly fraud compared to traditional card transactions. However, merchants must still adhere to the specific terms and conditions of each individual APM provider regarding refunds and disputes.
What is the typical settlement timeframe for APM transactions?
Settlement periods are determined by the specific APM and the agreement with the PSP. Some methods, like major digital wallets, may settle on the same schedule as cards, typically T+2 or T+3.
Other bank-based methods or niche local schemes might have longer cycles, ranging from 5 to 14 days.
It is essential for merchants to analyse the liquidity impact of each method, as asynchronous payments may result in a delay between the transaction authorisation and the actual receipt of funds.
Do I need a separate merchant identification number (MID) for each APM?
In most modern payment orchestration or PSP setups, merchants do not require a separate MID for every APM. The provider typically aggregates multiple methods under a single contractual and technical integration.
However, some specific regional methods or high-risk APMs might require a direct relationship with the underlying provider, necessitating a separate account or identifier. A consolidated gateway approach generally simplifies this by providing a single point of entry for multiple payment types.
Can APMs support recurring billing and subscription models?
Many APMs are designed for one-off transactions, but several support recurring functionality. Digital wallets often allow for stored credentials or 'tokenised' recurring payments.
Direct debit schemes like SEPA are specifically built for subscriptions.
When choosing an APM for a recurring model, merchants must verify if the method supports Merchant Initiated Transactions (MIT) and if the customer's initial authorisation remains valid for future payments under local regulations and specific scheme rules.
How does integration of local APMs affect the checkout user experience?
Effective integration should be dynamic, presenting the most relevant APMs based on the customer's IP address, browser language, or shipping destination. Forcing a user through too many irrelevant options can lead to choice paralysis.
A well-optimised checkout will prioritise the top two or three local methods alongside traditional card options. Technical implementation usually involves either a redirect to the provider's hosted page or an embedded component that keeps the customer on the merchant's site while they authenticate.
Related features.
Related guides.
See how Cardflo compares.
Ready to improve your payments setup?
Tell us about your business. We'll match you with the right acquiring partners and the right route, typically inside a week.